Thursday, December 27, 2018

We can question the judgements of the high court and the
Supreme Court. Yes, there is no bar to this.

The Supreme Court, from time to time, even reviews its own
judgements which are deemed it to be incorrect now. Some of the examples are:
the State entry tax matter, and Bangalore water supply case, and many
more. In this way the Supreme Court, when satisfied about the flaw in the
judgement, adjudicates under its power of review.

The Supreme Court delivered a judgement this month on Rafale
fighter jet procurement giving a clean chit to the government. Let us
understand what the apex court of a three-judge bench headed by Chief Justice
of India has said in its judgement-

(1)There is no occasion to doubt the process of
decision making in the award of contract for the purchase of 36 Rafale jets. It
is not the Court’s job to get into comparative pricing details.

(2)The apex court said, “We don’t find any
material to show that it’s commercial favoritism.” “We are satisfied that there
is no occasion to doubt the process. A country cannot afford to be
underprepared. It is not correct for the court to sit as an appellant authority
and scrutinize all aspects”.

(3)There is no reason for interference in the
choice of offset partner and perception of individuals can’t be the basis for
roving inquiry in sensitive issue of defense procurement. We can’t compel the
government to purchase 126 aircrafts and it’s not proper for the court to
examine each aspect of this case. It isn’t a job of the court to compare
pricing details.

(4)The top court also said, “There has been the
necessity of fighter aircraft and the country cannot remain without fighter jets.”
Nobody questioned procurement of Rafale jets when the deal was finalized in
September 2016, it said. The court also noted there is a need for induction of
fourth and fifth generation of fighter aircrafts like Rafale in Indian Air
Force.

WHY SUPREME COURT COULD NOT COME UP TO THE ACID TESTThis has been said by many legal brains in the country that
Article 136 and Article 32 of the Indian Constitution limits the Supreme Court
to decide the issues like pricing, the purchase process, the sovereign guarantee
and the corruption in the Rafale contract and possibly having looked at it they
(the judges) have again said in Para 15 that we are constricted by our power of
judicial review.

They have again said in
Para 34 that our judgment is purely from the standpoint of our power under
Article 32. They have further added that “It was made clear that issue of
pricing or matters relating to technical suitability of the equipment would not
be gone into by the Court. They have again said in Para 15 that we are constricted
by our power of judicial review. Therefore, the only two options seem to be
possible and they are either JPC or CBI to find out and decide who are the
persons who are accused and then the process of law must be set in motion. The
central government presented “one-sided half-baked” information to the SC on
“an unsigned affidavit” which was not available for scrutiny.

THE ISSUES IGNORED BY SUPREME COURT LET US EXAMINE The final judgment shows that there are a number of details, and
arguments, that the court has either ignored, side-stepped or merely accepted
at face-value without further questioning. I shall like to bring them up point
wise-

1BENCHMARK PRICE WAS IGNORED

The manner in which the benchmark price for the
36-Rafale-deal was changed in the last moment has been the central issue of
difference. In particular, debate has centered on how a senior defense
ministry official’s objections were overruled.

And that the final
decision to opt for a formula that delivered a higher benchmark price was taken
not by the defense ministry or Minister Manohar Parrikar; but by the Cabinet
Committee for Security.

The question also raises eyebrow about why Defense
Acquisition Council, the top most institution to decide the pricing in any
defense purchase and headed by Defense Minister is bypassed? A former senior defense ministry official
Sudanshu Mohanty is reported to have expressed his surprise in which the change
was approved as “strange, even queer”.

Further, as per the information available in public domain,
the Defense Acquisition Council headed by the defense minister and consisting
of all top MoD brasses didn’t recommend the case, instead left it to the
Cabinet Committee on Security to take a call. Why? This needs to be looked
into. Why this level jumping was structured? While this issue could
technically fall under the ‘pricing’ aspect of the Rafale deal, which the
Supreme Court has chosen not to examine, it clearly highlights that there were
not-insignificant deviations in the procurement process.

(2) WHY 36 FIGHTER JETS INSTEAD OF 126

“We cannot sit in judgment over the wisdom of
deciding to go in for purchase of 36 aircrafts (sic) in place of 126”, the
Supreme Court said, sidestepping the real issue at hand: the speed and manner
in which the UPA-era, 126-aircraft deal was shelved and a new 36-aircraft
contract was agreed upon without the procedures prescribed for this actually
being followed. This has been a very strong point and SC should have considered
it but it did not.

The apex court acknowledges that a “process of withdrawal” of
request for purchase (RFP) for the 126-jets was initiated in March 2015 and a
new Inter Governmental Agreement (IGA) was signed for 36 aircraft a few weeks
later in April 2015. The apex court doesn’t see that following important issues
have been raised by the petitioners which still remain unanswered till to this
day by the Supreme Court.

(a)The government has not been able to present the
requisite papers for this “process of withdrawal” in the court till today.

(b)Why were defence minister Manohar Parrikar and
foreign secretary S Jaishankar not kept in the loop about this process?

(c)Why did Dassault CEO Eric Trappier say that the
126-aircraft deal was “95% complete” on March 28, 2015, if the process for
withdrawal of RFP had already been initiated by then? What was the process
undertaken before the IGA was signed? Who was consulted? By not even
trying to take a look at these questions, or trying to obtain an answer during
the court hearings, there appears to be a significant hole in the apex court’s
assessment that there is no reason to doubt the procurement process.

(3) WHY IGNORED SOVEREIGN
GUARANTEE

A sovereign guarantee is a
reassurance that is commonly found in defense contracts that are signed between
governments. The lack of such a guarantee was discussed during the court
hearings and finds a brief acknowledgement in the judgment, as part of a
summary of the petitioner’s arguments.

However, the verdict stops
short of examining its significance or implication and does not discuss what it
might mean for the manner in which the Rafale deal was negotiated by the Modi
government.

The Supreme Court also
ignored concerns raised about the government of India dropping India as a seat
of arbitration in the event of any dispute arises with France.

(5)WHY NOT EXAMINES PRICING

When the
Supreme Court took up the petitions, it made it clear that it would not go into
the “issue of pricing” or “matters relating to technical suitability of the
equipment”. Nevertheless, in the course of the hearings, it directed the Modi
government to submit details “with regard to pricing and the advantages
thereof” in a sealed cover. Here’s where things get confusing. The court notes
that it has examined all the price details and item-wise costing carefully, but
then merely states that the government has claimed “there is a commercial
advantage in the purchase of 36 aircraft” and that there are “certain better terms”
with regard to the weapons package. The SC further adds that “It is certainly
not the job of this Court to carry out a comparison of the pricing details in
matters like the present. We say no more as the material has to be kept
in a confidential domain”.

(6)HOLLANDE’S STATEMENT DOWNPLAYED

The Supreme Court appears
to place a great deal of emphasis on former French president Francois
Hollande’s controversial remarks that Anil Ambani was foisted on the French
side by India as an offset partner. However, the significance of Hollande’s
remarks lie not in their content, but because of the controversy they
triggered. Indeed, the judgement implies – wrongly – that suspicion over the
Rafale deal began only after “certain newspapers reported a statement claimed
to have been made by Hollande.

With regard to India
pushing Anil Ambani’s Reliance forward as an offset partner, the verdict says:
“There has been a categorical denial, from every side, of the interview given
by the former French president seeking to suggest that it is the Indian
government which had given no option to the French government in the matter.” There are two problems with this line of reasoning.Firstly, questions
over potential irregularities in the Rafale deal happened as soon as the deal
was announced and then started to build up a year later. The Hollande remark,
which suggested potential cronyism, only exacerbated existing concerns and
certainly did not spark them.

Secondly, there has not been a “categorical denial, from
every side” with regard to Hollande’s remark. Essentially, the Supreme Court
has accepted a number of weak denials, and believes these comprehensively
remove the doubts Hollande’s sensational claim raised. (6) SUPREME COURT CONFUSED WITH MUKESH RELIANCEAs was advertised by different NDA ministers over the past
few months that it was UPA tenure when the offset was finalized and the
implication will be that an impression will go across the masses that Dassault
CEO Eric Trappier have tried to say that by choosing Anil Ambani’s Reliance
Infrastructure as an offset partner for the 36-Rafale-deal, they are merely
continuing a partnership that Mukesh Ambani’s Reliance Industries had with
Dassault back in 2012. This also implies that this partnership was forged
during the UPA era and has been carried over, thus providing a buffer to the
NDA-II administration. This couldn’t be farther from the truth. The partnership
that Mukesh Ambani had with Dassault in 2012 has nothing to do with the
partnership between Anil Ambani and the same company in 2015.The Supreme Court
also appears to be similarly confused or misled because on page 25 of the
verdict, it gets it right by acknowledging that after Dassault became the
lowest bidder for the 126-aircraft-deal in 2012, it partnered with Mukesh
Ambani’s Reliance Industries, a company it differentiates from Anil Ambani’s
Reliance Defence by calling the former “another business group”. On the very
next page though, it quotes a Dassault press release that suggests that while
Anil Ambani’s Reliance Aerostructure came into being in the “recent past”,
there was “possibly an arrangement between the parent Reliance company and
Dassault starting from the year 2012”.

These points are
absolutely wrong and the Supreme Court’s verdict ignores, confuses and
dangerously mixes up basic facts is a worrying sign.

It is by relying in part
on an untruthful defense deployed by Dassault and the BJP party leaders that the
apex court concludes there is no “substantial material on record to show that
this is a case of commercial favouritism to any party”.

(7)WHY HAL IGNORED

One narrative put forth by
the Modi government for the need to quickly shift to a smaller 36-aircraft-deal
through an intergovernmental agreement is that the public sector Hindustan
Aeronautics Ltd proved to be an obstacle in clearing the larger
126-jet-contract.

The Supreme Court verdict
summarises the problems that HAL allegedly posed – higher man-hours,
contractual obligations and delays – and notes that it was because of this
stalemate that the process of RFP withdrawal began in March 2015. The problem
with this is two-fold. First, public statements made by Dassault
indicated that the problems with HAL had been largely resolved. Secondly,
in September 2018, former HAL boss T. Suvarna Raju indicated that a
work-share-agreement between the defense PSU and Dassault had actually been
signed. This brings us to a larger point. If the Supreme Court summoned
senior Indian Air force officials to verify the Modi government’s claim that
the Rafale was urgently needed, why was Raju or other former HAL officials not
asked to provide testimony on whether the 126-aircraft tender was essentially
dead and over by March 2015? The evidence that Raju or others could have
provided would have shed some light on the Modi government’s Rafale timeline.

(8)IGA RULES NOT FOLLOWED

The court notes the
contention of the petitioners that under the Defence Procurement Guidelines for
2013, the government is allowed to purchase weapons and weapons systems through
the inter-governmental agreement (IGA) route under three conditions: (a)Proven
technology and capabilities belonging to a friendly foreign country is
identified by our Armed Forces while participating in joint international
exercises;

(b) Large value weapon
system/platform in service in a friendly foreign country is available for
transfer or sale normally at a much lesser cost; or

(c) Requirement of
procuring a specific state¬ of¬ the ¬art equipment/platform where the
Government of the OEM’s country might have imposed restriction on its sale and
thus the equipment cannot be evaluated on ‘No Cost No Commitment’ basis.
(emphasis added)

The petitioners had
contended that none of these conditions were met and the court appears to
concede as much by noting that “minor deviations” in process may have
occurred:“We have studied the material carefully. We have also had the benefit
of interacting with senior Air Force officers who answered court queries in
respect of different aspects, including that of the acquisition process and
pricing. We are satisfied that there is no occasion to really doubt the
process, and even if minor deviations have occurred, that would not result in
either setting aside the contract or requiring a detailed scrutiny by the
court.” Having said this, the court then weakens its own argument – the entire
logic of which is built around the imperative of military necessity – by adding
gratuitously: “We have been informed that joint exercises have taken place and
that there is a financial advantage to our nation”. (emphasis added).After
suggesting that the absence of the precondition for an IGA may be a minor
deviation, the fact that the court felt compelled to clutch at the fig leaf of
‘joint exercises’ to justify the deal for an aircraft that had been in the IAF’s
radar for more than a decade suggests the judges are not fully convinced by
their own logic.

(9)GOVERNMENT MISLED ON CAG REPORT ON RAFALE

Hours after the full-text
of the Supreme Court verdict became available publicly; one paragraph on the
CAG audit of the Rafale deal drew more attention than the rest. At one point,
which addresses the pricing aspect of the 36-aircraft-contract, the judgement
notes: The pricing details have, however, been shared with the Comptroller and
Auditor General (hereinafter referred to as“CAG”), and the report of the CAG
has been examined by the Public Accounts Committee (hereafter referred to as
“PAC”). Only a redacted portion of the report was placed before the Parliament,
and is in public domain. (Page 25)There has been no report on CAG published as
yet and this is the problem area.